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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (61829)	5/4/2002 9:12:09 PM
From: Rock_nj	Respond to of 99280

I think the whole problem with valuing tech companies is that tech companies (more than most companies in the market) reach a value based on the heavy demand for their stock rather than traditional measures like P/E. That is why techs often trade for astronomical P/Es. It's a supply and demand issue. People want to own a piece of the tech pie, so they pay whatever price they can to get in and the price of tech stocks go up as a result. Of course, that whole rationale got way out of wack in the late 90s and around 2000 when people were paying rediculous P/Es just to get a piece of the tech pie. You're right, if tech companies show flat or no earnings for years to come, the NAZ might deflate some more. But, deflate to sub 1,000? I'm in the camp that believe that we're in for a modest recovery in tech spending and tech company's earnings over the next few years, so present prices should hold and slowly climb, IMO. People still want a piece of the tech pie. There are less tech companies these days (less supply of stock) and will probably be even fewer tech companies by the end of the year as more go BK, merge or get brought out. I don't see NAZ below 1,000 happening with even less supply of tech stocks out there. Even the long term trend is on the side of NAZ staying above 1,600. That is where the long term trend puts the NAZ in May, 2002, if you go back before the late 90s/2000 spike. Time will tell. If the bears are short, I hope they're right and make a lot of money. But, I haven't really seen a good case for why NAZ will go below 1,000 when it barely went below 1,400 after the biggest terrorist attack our nation has ever suffered and a looming recession to boot. NAZ below 1,000? I just don't see it happening. But, that's just my humble opinion.